Holding

Section 4 of the Bihar Building (Lease, Rent and Eviction) Control Act prohibits illegal rent enhancement and the Act provides no mechanism for automatic adjustment of excess rent, so the tenant’s claim of set‑off fails and eviction is justified.

Summary

The appellant, a tenant, occupied a residential‑shop premises originally at a rent of Rs 55 per month. After the landlord purchased the property, the rent was unilaterally raised to Rs 65 (the landlord later claimed Rs 70) without complying with the Bihar Building (Lease, Rent and Eviction) Control Act. The tenant paid the higher amount but later defaulted on rent from October 1975 to June 1976, leading the landlord to sue for eviction and arrears. The lower courts held that the rent increase was unlawful, fixed the lawful rent at Rs 55, and declared the tenant a defaulter, ordering eviction. On appeal, the Supreme Court affirmed that Section 4 of the Act creates an absolute prohibition on illegal rent enhancement and that the Act contains no provision for automatic adjustment of excess rent against later arrears; any set‑off must be expressly claimed in writing. Consequently, the tenant could not rely on automatic adjustment and his eviction was upheld. The appeal was dismissed.

Issues considered

Whether the rent increase from Rs 55 to Rs 65/70 was lawful under the Bihar Building (Lease, Rent and Eviction) Control Act.
Whether excess rent paid due to an illegal increase can be automatically adjusted against subsequent arrears of rent.
Whether the tenant was a defaulter liable to be evicted.
Whether the landlord had a bona‑fide requirement for the premises.

Legislation cited

Bihar Building (Lease, Rent and Eviction) Control Acts. 11(1), s. 4
Transfer of Property Acts. 106

Subjects

rent enhancementillegal rent increaseautomatic set‑offevictionBihar Building Actlandlord‑tenantarrears of rentadjustment of excess rent

Judgment

BHOJA @ BHOJA RAM GUPTA A
v.
RAMESHWAR AGARWALA AND ORS.

MARCH 16, 1993

[B.P. JEEVAN REDDY AND DR. A.S. ANAND, JJ.] B

. Bihar Building (Lease, Rent and Eviction) Control Act:

Section 4-Rent-Enhancement of-Procedur,.,-..Excess rent paid by
tenant whether could be automatically adjusted against subsequent defaults C
in payment of monthly rent.

The defendant-appellant was a tenant under the plaintiff-landlord
· on a monthly rent of Rs.70. The appellant defaulted in the payment of the
rent of the suit-premises - residential-cum-shop ·premises -with effect from
October, 1975 to June, 1976. D
As the appellant did not vacate the premises even after being served
with a notice under section 106. Transfer of Property Act, a suit was filed
for his eviction from the suit premises, being a defaulter. The landlord
also pleaded his own bona fide requirement of the suit-premises. E
The appellant-tenant submitted that he was originally a tena!'t
under one Smt. Sita Devi, the owner of the suit premises at a monthly rent
of Rs.55; that he was paying the rent to Smt. Sita Devi and after the
plaintiff - landlord purchased the house from her in 1968, he continued as
tenant of plaintiff; that the plaintiff illegally increased the rent from Rs.55 F
to Rs.65 per month (and not Rs. 70 per month.) under threat of eviction;
that tenant paid the rent at the rate of Rs. 65 per month upto the month
commencing from 16.1.1976, when the plaintiff-landlord refused to accept
the same with effect from 16.2.1976; that defendant-tenant did not default
in payment of rent as subsequently rent had been sent by Money Order; G
that the landlord-plaintiff did not have any bona fide necessity for the
premises and that the suit was not maintainable .

.The Trial Court held that the suit was maintainable, the plaintiff
had cause of action for the suit and tenancy of the defendant was validly
terminated. It also held that the defendant-tenant was a defaulter and was H
369
370 SUPREME COURT REPORTS (1993] 2 S.C.R

A liable to be evicted from the primises. It however held that the plaintiff
had failed to prove his case regarding bona fide requirement of the suit
premises. The Trial Court however held that the plaintiff-landlord could
not have enhanced the rent without taking recourse to the provisions of
Bihar Building (Lease, Rent and Eviction) Control Act and therefore the
Court calculated the arrears of rent at Rs.SS per month.
B
The Trial Court decreed the suit partly and directed the defendant-
tenant to vacate the suit premises and to deliver the vacant possession of the
same to the plaintiff-landlord within 90 days from the date of the decree.

Tenant-appellant filed a First Appeal against the Trial Court's
C judgment. Plaintiff-landlord also filed cross-objections challenging the
linding of the Trial Court regarding determination of the r.tte of rent and
the arrears of rent. The First Appellate Court dismissed the Cross-objec·
tions and conlirmed the linding of the Trial Court to the effect that the
rent lawfully payable was Rs. SS per f!10nth. It held that the defendant-
D tenant was a defaulter with effect from 16.S.1976 onwards and he was
liable to be evicted and dismissed the appeal of the tenant.
.,
The Second Appeal filed by the appellant-tenant was dismissed by
the High c.ourt in limine, ag-dinst which by special leave the present appeal
was filed .in this Court.
E
The appellant contended that since the rent lawfully payable per
month was Rs. SS per month and not Rs. 6S which was paid by the
appellant, the excess amount paid should be adjusted, there could be no
quotation of holding appellant a defaulter. (This ple11 of appellant was
F rejected by the First Appellaie Court on the ground that no pr.tyer for
·adjnstnien~ in writing was made by him.)

The "respondent-landlord submitted that the excess rent paid by the
tenant to his landlord in pursuance of a mutually agreed illegal enhance-
ment, could not get automatically adjusted against the subsequent
·G defaults in the payment of monthly rent.
Dismissing the appeal of the tenant, this Court,

HELD: 1.01. Section 4 of the Bihar Building (Lease, Rent and
Eviction)· Control Act creates an absolute prohibiton against illegal in-
H crease or enhacement of rent except in the manner provided by tbe
BHOJA RAM GUPTA v. RAMESHWAR AGARWALA 371

,.._ provisions of the Act itself and lays down that it is not even permissible A
for the parties to contract themselves out of such a prohibition. Thus, on
its plain language any increase or claim to increase in the rent by the
landlord would be unlawful and any agreement to do so except in accord-
ance with the provisions of the Act would not cure the illegality. [377B-C]
'

1.02. The Act does not contain any provision for automatic adjust·· B
ment of excess rent. Neither in reply to the notice under Section 106 of the
Transfer of Property Act nor in the written statement or through any
other writing was the adjustment of excess rent towards the arrears
claimed by the tenant from the landlord. There also was no agreement
between the parties at any point of time for adjustment of the excess rent C
illegally paid towards the rent falling dne subsequently. [377F]

1.03. The rent payable in the instant case was only Rs.55 per month
and the tenant was made to pay Rs.65 per month from 1968 onwards after
the property had been purchased by the plaintiff-landlord nnder threat of D
eviction, it most be held that the increase in the rent from Rs.55 per
month to Rs.65 per month was unlawful and the landlord was not entitled
to recover anything more than Rs.55 per month by way of rent. [377C-D]

1.04. The excess rent paid by the tenant in pursuance of mutually
agreed illegal enchancement thereof' by the parties does not get automat- E
ically adjusted against the subsequent defaults in the payment of the
monthly rent under the Act and even under the general law such an
automatic adjustment is not countenanced. [381B]

1.05. A tenant cannot save himself from the conseqences of e~ction F
under the Act on the ground of default in the payment of rent by claiming
automatic adjustment of any excess rent paid consequent upon mutual
enhacement of rent, even if illegal unless there is an agreement between
the parties for such an adjustment. The tenant may also in a given case
seek adjustment of the excess rent in the hands of the landlord against the
arrears by specifically asking the landlord for such an adjustment before G
filing of the suit or in response to the notice to quit and even in the written
statement by way of set otr witlHn the period of limitation and by following
the procedure for claiming such a set off, while resisting the claim for
eviction on the ground of' default in payment of arrears of rent but he
cannot claim _•automatic adjustment'. [381H, 382A-B] H
372 SUPREME COURT REPORTS [1993] 2 S.C.R.
,
A Mohd. Salimuddin v. Misri Lal and Anr, [1986] 1 SCR 622; Mis.
Sarwan Kumar Onkar Nath v. Subhas Kumar Agarwal/a, (1987] 4 SCC 546,
distinguished.

Guiab Cha11d Prasad v. Budhwanti and Anr., AIR 1985 Patna 327
(F.B.) and Nune Pandura11ga Rao v. ··Divvala Gopala Rao, AIR 1952
B Madras 827, approved.

Budshwanti and A11r. v. Guiab Chand Prasad, [1987] 2 SCC 153,
referred to.

c 1985. CIVIL APPELLATE JURISDICTION : Civil Appeal No.2924 of
From the Judgment and Order dated 12.4. 1985 of the Patna High
Court in S.A. No.28 of 1985(R).

J.P. Goyal, M.R. Bidsar and Rajesh for the Appellant.
D
D.P. Mukherjee for the Respondents.

The Judgment of the Court was delivered by

DR. ANAND, J. This appeal, by special leave, filed by th"1 tenant, is
E
directed against the dismissal of his Second Appeal, in limine by the High
Court of Patna (Ranchi Bench) on 12.4.1985. ·

The landlord filed a suit for eviction of the appellant from the
residential-cum-shop premises situate at holding No.224/D Ward No.7
F Bazar Mohalla J ugsalai. Shorn of details the case of the landlord is that
the appellant was a tenant under him on a monthly rent of Rs.70, but had
not paid the rent ·of the disputed premises with effect from October, 1975
to June, 1976 and being a defaulter for more than two months, was liable
to be evicted. The landlord also cliamed arreas of rent from October, 1975
to June, 1976 amounting to Rs. 630. The landlord also pleaded his own
G bona fide requirement of the suit premises. The suit was filed in the Court
of Munsif, Jamshedpur in 1976 because even after a notice under Section
106 of the Transfer of Property Act, terminating the tenancy had been
-~
served on the tenant, he did not vacate the premises. The suit was resisted
and it was pleaded on behalf of the tenant-appellant that the premises in
H dispute originally belonged to one Smt. Sita Devi Khirwal from whom he
BHOJA RAM GUPTA v. RAMESHWAR AGAR WALA [ANAND, J.] 373

had taken the premises on monthly rent of Rs. 55; that he had been paying A
the rent to Smt. Sita Devi Khirwal,all along and after the plaintiff-landlord
purchased the house from her in 1%8, the defendant continued as his
tenant but the plaintiff-landlord illegally increased the rent of the suit
premises from Rs. 55 to Rs. 65 p.m. (and not Rs. 70 p.m.) under threat of
eviction and the tenant paid the rent at the rate of Rs. 65 per month upto
B
the month commencing from 16th of January, 1976 when the plaintiff-
landlord refused to accept the same with effect from 16.2.1976. It was
maintained that the defendant-tenant had not defaulted in the payment of
rent as subsequent rent had been sent by money order. It was also asserted
that the landlord-plaintiff did not have any bonafide necessity for the
premises. On the pleading of the parties, the following issues were framed: c
"l. Is the suit as framed maintainable?

2. Have the plaintiffs any cause of action for the suit?

;l. Has the tenancy of the defendant been validly deter- D
mined?

4. Is the defendant a· defaulter?

5. Do the plaintiff require the suit premises for their bona
fide use and occupation? E

6. Is the defendant liable to be evicted from the suit

-
premise?

7. Are .the plaintiffs entitled to the arrears of rent as
claimed? F

8. To what relief or reliefs, if any, are the plaintiffs en-
titled?'1

Issue Nos. 1, 2 and 3 were decided against the defendant-tenant. Issue No.5
G
was decided against the plaintiff-landlord and it was held that he had failed
to prove the case regarding bonafide requirement of the suit premises.

Issue Nos.4 and 6 were taken up together for consideration. The
Trial Court held on facts that the defendant-tenant was a defaulter and was
liable to be evicted from the suit premises. H
374 SUPREME COURT REPORTS [1993) 2 S.CR.

A Dealing with Issue No.7, the Trial Court noticed that the plaintiff- -~.
landlord had claimed arrears of rent from the defendant from October,
1975 to June, 1976 @ Rs. 70 per month. It was found that originally the
rent of the suit premises was Rs. 55 per month and that 'the plaintiff-
landlord had after purchaing the suit premises unlawfully enhanced the
rent of the premises from Rs. 55 to Rs: 65 per month and that the tenant
B
continued to pay the rent @ Rs. 65 per month under threat of eviction. )I
The learned Trial Court accepted the plea of the defendant-tenant that the
plaintiff-landlord could not have enhanced the rent for the suit premises
without taking recourse to the provisions of Bihar Building (Lease, Rent
and Eviction) Control Act (hereinafter the Act) and held that rate of rent
c for the suit premises shall be deemed to be Rs. 55 per month only. The
Trial Court,. however, found, on facts, that the defendant-tenant had not
paid rent to the plaintiff-landlord from the month commencing from 16th
October, 1975 upto the month commencing 16th June, 1976 and therefore,
the defendant-tenant was in arrears of rent for 7 months calcutated at
D Rs55 per month. A decree for the arrears of rent for Rs.385, calculated
at Rs.55 per month for 7 months, was, therefore, passed in favour of the
plaintiff-landlord and issue No.7 decided accordingly.

As a result the suit of the plaintift~landlord wad decreed in part with
proportionate easts and the defendant-tenant was, directed to quit and
E vacate the suit premises and deliver the vacant possession of the same to
the plaintiff-landlord within 90 days from the date of the decree. The
defendant-tenant was also directed to pay a sum of Rs.385 to the plaintiff-
landlotd, being the arreas of rent within the aforesaid period of 90 days.
Aggrieved by the judgment and decree of the Trial Court, the tenant filed
F a First Appeal in the Court of the 3rd Additional Subordinate Judge, .
Jamshedpur. The plaintiff-landlord also filed cross objections challenging
the findings-on Issue No.7 stating therein that the Trail Court ought to have
passed a decree for arrears of rent calculated @ Rs.70 per month and not
@ Rs55 per month. The defendant-tenant, however, did not assail the
judgment and decree of the Trial Court except as -regarct;the findi~g.
G relating to the default of the tenant in payment of rent. Before the 1st
Appellate Court, only the following two points were canvassed:

'Point No.I: Whether the findings of the learned lower
court fixing the monthly rent of the suit premises at
H Rs55 is correct and sustainable in the eye of law?
BHOJA RAM GUPTA v. RAMESHWAR AGARWALA [ANAND, J.] 375

~- Point No.II: Whether the findings of the learned court A
below with regard to the default of the defendant
appellant is correct and sustainable in the eye of law?"

The 1st Appellate Court confirmed the finding of the Trial Court to
the effect that the rent lawfully payable was Rs.55 per month and conse-
B
quently the" cross objections were dismissed. While deciding Point No.II
""' (supra), it was found that the defendant-tenant had paid the rent @Rs. 65
per month and after taking into account the rents remitted by money-order
etc, it was held that the defendant-tenant was a defaulter with effect from
16.5.1976 onwards and thus liable to be evicted.
c
Before the 1st Appellate Court, a plea was raised on behalf of the

- )'-,
defendant-tenant that since the rent lawfully payable per month as found
by the courts below was only Rs.55 per month and not Rs.65, as had been
admittedly paid by the defendant-tenant, the excess amount paid should
have been automatically adjusted in the future rent and if so adjusted, there D
could be no question of the defendant-tenant being held a defaulter. This
plea was rejected by 1st Appellate Court on the ground that no prayer for
adjustment in writing had been made by the defendant-tenant and, there-
fore, he could not be permitted to claim any such adjustment. The appeal
and the cross objections were, therefore, dismissed. The Second Appeal,
as already noticed, was dismissed by the High Court in limine. E
-~
In this appeal, learned counsel for the appellant-teI)ilnt has confined

---
his submission to the question of adjustment of the excess rent received by
the landlord against the arrears and it was submitted that had the excess
payment of Rs.10 per month made by the t~nant from September 1968 to F
September 1975, amounting to Rs.840, been taken into account toward the
claim of arrears, the plaintiff-landlord could lJO( obtain the decree of either
arrears of rent or of eviction against the ten~nt. Jn support of his submis-
sion, learned counsel has relied upon the judgment of this Court in Mohd.
Salimuddin v. Misri Lal and Anr., [1986] 1 SCR 622. Reliance was also
placed on Mis . Sarwan Kumar Onkar Nath v. Subhas Kumar Agarwalla, G
[1987] SCC 546 Learned counsel for the respondent on the other hand
placed reliance upon the judgment of the Full Bench of the Patna High
Court in Guiab Chand Prasad v. Budhwanti and Anr., AIR 1985 Patna 327
to urge that excess rent paid by the tenant to his landlord in pursuance of
a mHtually agreed illegal enhancement, could not get automatically ad- H

-
376 SUPREME COURT REPORTS [1993] 2 S.C.R.

A justed against the subsequent defaults in the payment of the monthly rent ._. ·
under the Act.

Before we take up the judgments relied upon by the learned counsel
for the parties for consideration, it would be appropriate to first notice
some of the admitted facts in the case.
B
It is an admitted case of the parties before us that the rent of the
premises was Rs.55 per month and that the sum had been raised lo Rs.65
per month without following the provision contained in the Act, though,
according to the landlord, the tenant had agreed to the increase of the rent
C voluntarily. Admittedly, the tenant had been in fact in arrears of rent for
a period of 7 months and was as such a defaulter.

In the notice under Section 106 of the Transfer to Property Act served
by the landlord on the tenant, determining the tenancy the tenant had been
put on notice that his eviction was sought not only on the ground of bonafide
D requirement of the landlord but also on the ground that he was a defaulter in
the payment of rent. In response to the notice, it was asserted that the re.nt
had been arbitrarily increased from Rs.55 per month to Rs.65 per month and
it was asserted that the t~nant was not a defaulter. However, no adjustment of
the excess payment of rent was claimed against the arrears. In the plaint filed
E by the landlord, the claim of arrears of rent amounting to Rs. 630 was
specifically made and though in the written statement, the claim was ,refuted
but no adjustment of the excess rent paid was claimed in the written state- ·
ment either. Before the Trial Court a.Jso,. as it would appear from the ]udg- ·
ment of the Trial Court, no such plea was raised.

F It is in this fact sitll'ation, that we shall now consider the submissions
made by the learned counsel for the tenant about the right of the tenant
to the adjustment of the excess amount against subsequent arrears.

Section 4 of the Act reads thus:-

G "4. Enhancement of rent of buildings.- Notwithstanding
anything contained in any agreer<lent or law to the con-
trary, it shall not be lawful for any landlord to increase,
or claim any increase in the rent which is payable for th.e
time being in respect of any building except in accordance
H with the provisions of this Act."
BHOJA RAM GUPTA v. RAMESHWAR.AGARWALA [ANAND, J.] 377

This Section ~hich begins with the noll-obstante clause declares that 'A
"--- any agreemen! to· increase the rent except in accordance with the
provisions of the Act, would not only be void but indeed illegal. The
Section creates an absolute prohibition against illegal increase or enhance-
ment of rent except in the manner provided by the provisions of the Act
itself and lays down that it is not even permissible for the parties to contract
themselves out of such a prohibition. Thus, on its plain language, any
B
increase or claim to increase in the rent by the landlord would be unlawful
and any agreement to do so except in accordance with the provisions of
the Act would not cure the illegality. Since, the rent payable in the instant
- case as has been admitted before us and found by the courts below was
only Rs.55 per month and the tenant was made to pay Rs.65 per month c
from 1968 onwards after the property had been purchased by the plaintiff-

-
I
~
landlord under threat of eviction, it must be held that the increase in the
rent from Rs.55 per month to Rs.65 per month was unlawful and the
landlord was not entitled to recover anything more than Rs.55 per month
by way of rent. Considered in this light, it is manifest at the landlord had
D
illegally recovered from the tenant Rs.10 per month more than what was
lawfully due to him. The question, however, which arises for our considera-
tion is whether the excess rent paid by the tenant, on account of the
unlawful enhancement, could be automatically adjusted against the sub-
sequent defaults in payment of the monthly rent?
E
The Act does not contain any provision for automatic adjustment of
the excess rent. As already noticed, neither in reply to the notice under
Section 106 of the Transfer of Property Act nor in the written statement
or through any other writing was the adjustment of excess rent towards the
arrears claimed by the tenant from the landlord. There also was no F
agreement between the parties at any point of time for adjustment of the
~- excess rent illegally paid toward the rent falling due subsequently.

In Mohd. Sa/imuddill v. Misri Lal and Anr., (supra), the facts were
that the tenant had advanced a sum of Rs.2,000 to the landlord in order to G
secure the tenancy by an agreement which specifically provided that the
loan amount could be adjusted against the rent which accured sub-
~.,...._
sequently. The landlord filed a suit against the tenant for eviction on the
ground of arrears of rent. The lower Appellate Court dimissed the suit
holding that the tenant was not in arrears of rent since the amount H
378 SUPREME COURT REPORTS [1993) 2 S.C.R.

A advanced by the tenant as ioan as per the agreement could be adjusted
against the rent and the said amount was sufficient to cover the landlord's
claim of arrears. The High Court in the Second Appeal filed by the
landlord however set aside the judgment of the 1st Appellate Court holding
that the loan advanced by the tenant being in violation of the provisions
B contained in Section 3 of the Act could not be adjusted and that the tenant
was in arrears of rent and therefore liabl.e to be evicted. On an appeal by
special leave this Court noticed the following admitted facts:

"(1) The tenant had advanced a sum of Rs.2000 under an
agreement which inter alia contained a stipulation that the
c loan amount was to be adjusted against the rent which
accured.

(2) The amount so advanced by the tenant was sufficient
to cover the landlord's claim of arrears.

D (3) If the loan amount was accordinglyotdjusted towards
the rent which accrued, the tenant was not in arrears of
rent. f

This Court did not agree with the High Court that since the loan
E advanced by the tenant was in violation of the prohibition contained in
Section 3 of the Rent Act, the tenant was not entitled to claim adjustment
of the loan amount against rent which had accrued subsequently. Allowing
the appeal the Court rejected the application of doctrine of pari delicto to
the facts of the case by observing:

F "..... The doctrine of pari de/icto is not designed to reward
the 'wrong-doer', or to penalize the 'wronged', by denying
to the victim of exploitation access to justice. The doctrine
is attracted only when none of the parties is a victim of
such exploitation and both parties have voluntarily and by
their free will joined hands to flout the law for their mutual
G
gain. Such being the position the said doctrine embodying
the rule that a party to a transaction prohibited by law
cannot enforce his claim in a Court of law is not attracted
in a situation like the present.. ...."

H Consequently, the judgment and decree passed by the High Court was set
BHOJA RAM GUPTA v. RAMESHWAR AGAR WALA (ANAND, J.] 379

aside and that of the ls! Appellate Court restored. This Judgment, has no A
application to the facts of the present case as leaving aside everything else,
the agreement by which the sum of Rs.2,000 had been advanced, by the
tenant to the landlord to secure the tenancy, had specifically provided that
the loan amount could be adjusted against the rent which may accure
subsequently. It would have been perpetuating. immorality if the landlord
after taking loan of Rs. 2,000 with the clear stipulation regarding its
B
adjustment against arrears falling due subsequently was to rely on the
illegal nature of the transaction and deny adjustment. There is not even a
demand, much less any agreement, between the parties in the present case
for adjustment of the excess amount of rent illegally paid towards the rent
accruing subsequently. c
In Mis Sarwan Kumar Onkar Nath v. · Subhas Kumar Agarwal/a I ,
(supra), the facts were as follows:

The appellant was a lessee of the building belonging to the respon- D
dent on a monthly rent of Rs. 70. At the time of taking the premises on
rent, he paid in advance two months rent i.e. Rs.140. The appellant paid
rent regularly thereafter but did not pay rent for the months of Sepiember
and October 1972. Taking advantage of the non-payment of the rent in
respect of the said two months, the respondent-landlord filed a petition for
.)\ eviction agaist the appellant-tenant contending that the appellant being a E
defaulter in payment of rent for two months had become liable to be
evicted from ibe premises in quention under clause ( d) of Section 11(1) of
the Bihar Buildings (Lease, Rent and Eviction) Control Act, 194 7. The
tenant pleaded in!er a/ia in his written statement that from the time of
inception of the tenany, he had paid the respondent a sum of Rs.140 as F
advance rent with an understanding that tlie amount of advance could be set
~-- off against the rent whenever necessary or required and that since under
Section 3 of the Act it was not lawful for the landlord to claim to receive,
in consideration of the grant, renewal or continuance of the tenancy of any
building, any amount by way of advance or premium the appellant could
not be considered to be a defaulter in payment of rent. Agreeing with the G
plea of the tenant, the Trial Court dismissed the suit and the appeal filed
'r- by the landlord before the Additional Subordinate Judge also failed. The
landlord filed a Second Appeal before the High Court. The High Coilrt on
facts found that the tenant had failed to pay the rent for the months of
September and October 1972. It accepted the plea of the tenant that he H
380 SUPREME COURT REPORTS , [1993] 2 S.C.R.

A had paid the sum of Rs.140 as rent in advance but set aside the concurrent
judgments of the Courts below on the ground that since the tenant had
neither .orally nor in writing informed the landlord that he was exercising
the option, under the agreement, to adjust the amount paid in advance
towards the rent due for the months of September and October 1972 he
could not get the benefit of that ~mount paid to save himself from eviction.
B
This Court allowed the appeal and held that the tenant was, in view of the
advance paid and the agreement betwee1i the parties, not in arrears of rent
and setting aside the judgment of the High Court restored that of the Trial
Court which had beeri affirmed hy the 1st Appellate Court.

C Tlus Court took notice of the fact that though the receipt under
which the advance rent of Rs.140 had been paid did state that the amount
received "was liable to be adjusted towards the arrear of rent only on the
appellant informing the respondent orally or in writing that such adjust-
ment is to be made" but it construed the plea set out in the written
D statement to adjust the advane towards the rent due as amounting to an
assertion as contmeplated by the agreement and therefore it was held that
the tenant could not be treated as a defaulter. Sarwan Kumar's case also
is not an authority for the proposition of "automatic adjustment" as can-
vassed by learned counsel for the appellant because the construction
placed by this Court on the written statement in Sarwan Kumar's case was
E to the effect that the tenant had sought adjustment of the advance paid
against the rent for two months. That judgment also, therefore, does not -.JI_
advance the case of the appellant.

On the other hand, the opinion expressed by the Full Bench of the
p Patna High Court in Guiab Chand Prasad v. Budhwanti and Anr., which
has received the seal of approval of this Court in Budhwanti and Anr. v.
Guiab Chand Prasad,· [1987] 2 sec 153 fully supports the case of the
landlord. The precise question which was considered by the Patna High
Court was:

G "Whether the excess rent paid by the tenant to his
landlord, consequent upon a mutual (though illegal) en-
hancement of rent would be automatically adjusted
against all subsequent defaults in payment of monthly rent
for purposes of Ss. 4, 5 and 11 of the Bihar Buildings
H (Lease, Rent and Eviction) Control Act, 1947 ?"
BHOJA RAM GUPTA v. RAMESHWAR AGARWALA [ANAND, J.] 381

J ..,. After a detailed discussion and reference to a catena of authorities, A
the answer to the above question was rendered in the negative and it was
held that the excess rent paid by the tenant in pursuance of mutually agreed
illegal enchancement thereof by the parties does not get automatically
adjusted agianst the subsequent defaults in the payment of the monthly rent
unaer the Act and even under the general law such an automatic adjust-
ment is not countenanced.
B
;{
The Madras High Crout in Nune Panduranga Rao v. Divvala Gopala
Rao, AIR 1952 (Madras) 827 while construings a somewhat similar
provision contained in Section 7(2) of the Madras Buildings (Lease and
Rent) Control Act held: c
"Under the express provisions of this section if the tenant
has not paid or tendered the rent due by him within the
~ time prescribed tberein he is liable to be evicted. The
section does not compel a landlord to adjust the excess
amounts in his hands towards any a"ears of rent if the said D
amounts were not paid by the tenant towards the rent of any
plllticular month. It is true that on the date when a tenant
autho.rities the landlord to adjust the amounts with him
towards the rent of any particular month or months the
amount will be deemed to have been paid on that date E
towards rent. But. till that adjustment is made and the
~
amount is so appropriated, any amounts in excess of the
rent due with the landlord will only be payments made in
suspense. The facs that such excess came into the hands

- of the landlord by reason of the Rent Controller's order
fixing the fair r~nt does not really affect the question. I F
am, therefore, of opinion that the aniount not paid towards
rent of any particular n1onth .and the anzount not agreed· to
be adjusted towards any rent of a particular mollth is not
payment of rent within the meaning of S. 7(2) of the Act."
G
(Emphasis supplied)

We are in broad agreement with the view of the Full Bench of the Patna
High Court and the Madras High Court on the question of 'automatic
adj· stment' and hold that a tenant cannot save himself from the conse-
quences of eviction under the Act on the ground of default in the payment H
382 SUPREME COURT REPORTS (1993) 2 S.C.R.

A of rent by claiming automatic adjustment of any excess rent paid conse-
quent upon mutual enhancement of rent, even if illegal unless there is an
agreement between the parties for such an adjustment. The tenant may also
in a given case seek adjustment of the excess rent in the hands of the
landlord against. the arrears by specifically asking the landlord for such an
adjustment before filing of the suit or in response to the notice to quit and
B
even in the written statement by way of set off within the period of
limitation and by following the procedure for claiming such a set off, while
resisting the claim for eviction on the ground of default in payment of
arrears of rent but be cannot claim 'automatic adjustment'.

C TJius, in the facts and circumstances of this case, we find that the 1st
Appellate Court was fully justified in holding that the 'tenant could .not get
any automatic adjustment of the excess rent paid against the subsequent
defaults and since the tenant had been found on admitted facts to be in
default in the payment of rent, his eViction was well merited. The judgment
D of the High Court dismissing the second appeal, directed against concur-
rent findings, in limine, does not call for any interference.· This appeal
consequently fails and is dismissed but without any order as to costs.

The appellant, however, is given time till 31st May, 1993, to yield
vacant possession to the landlord subject to filing of the usual undertaking
within three weeks from today.

V.P.R. Appeal dismissed.

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